Bullock believes that a risk-based capital requirement would take account of the increased power that brokers have in the market.
He told the BSA conference: “Brokers are playing a large role in the industry and at the moment their capital does not reflect this. The truth is that the power lies with the intermediaries in the market and not the providers.
FSA director of retail policy division Dan Waters told delegates that the case for a true risk-based capital arrangement for intermediaries is a difficult one to make.
He said: “There are constraints upon us in the directive that means it would be difficult to achieve. I would not close the door on the debate, but we are also looking at other incentives placed upon IFAs in terms of capital in the business, especially when they leave the market.
“We want something to be in place in case claims are made as they can be made for quite a long time afterwards.”
Waters admitted that there are “some very tricky issues” regarding a capital regime for brokers but said it was in the process of consulting on this at the moment.